Adoption of the Federal Reserve’s instant payments platform, FedNow, is growing, however, of the more than 800 financial institutions using it, most are doing so in receive-only mode. 

Eighty-six percent of banks and 73% of credit unions are signed up with FedNow, The Clearing House and other vendor solutions as receive-only institutions, according to a report released this year by Cornerstone Advisors. These institutions can receive, but not initiate, payments.

Signing up as receive-only, is “a problem,” Heman Daswani, principal consultant in the payments group at tech provider  Temenos, told Bank Automation News, because fewer institutions are signing up to send payments.  

The reason is risk.  

“When you are receiving money instantly … there’s no fraud, there’s no chances of loss,” Daswani said. “Whereas on the sending side, money is leaving your institution instantly. So, you have to be ready to perform certain fraud checks or AML checks instantly before being able to send out money from your institution.” 

And that can be a challenge, especially for smaller institutions, Daswani said. 

“A lot of institutions are a little bit hesitant at signing up for sending because they see it as a risky proposition,” Daswani said. 

The Fed does not make public all of the institutions on send and receive but tech providers — including ACI Worldwide, BNY Mellon, CSI, Temenos and FIS — are listed on the Fed’s website as providing both send and receive capabilities for FedNow. 

One financial institution with the capability to both send and receive payments is Cupertino, Calif.-based Star One Credit Union.

Slow to send 

While send capabilities are not being adopted as quickly as receive, Bridget Hall, leader of real-time payments for the Americas at ACI Worldwide, told BAN that connecting to a new payments network isn’t something institutions do every day as they need time for onboarding.  

Even The Clearing House’s Real Time Payments network continues to work on adoption. It launched its network in 2017 and has recorded $55 billion in payment volume across 82 million transactions in the second quarter, according to the company’s July 10 release.

“The first required step when you join the scheme is you must receive; and then send can be added a little bit later,” Hall said. “I do think we’re starting to see more financial institutions connect to send, and they aren’t waiting as long between connecting with receive and connecting with send.” 

From a transaction perspective, for every receive, there must be a send, Hall said. As more financial institutions opt to send, the volume on FedNow will also increase. 

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Editor’s note: Bank Automation News has updated this story to more accurately reflect the data from Cornerstone Advisors surveyed FedNow, The Clearing House and other vendor solutions.